No growth again for zombie funds

MILLIONS of policyholders in endowments, bonds and pensions have earned no annual bonuses on their policies, despite a 17% gain in the stock market last year.

Insurers have just come to the end of their bonus season, when they announced payouts on their with-profits funds for 2007. The worst returns are among "zombie" funds, schemes that have been closed to new business and taken over by "vulture" firms such as Resolution and Pearl.

About 15m policies worth a total of £95 billion are tied up in these schemes.

However, there was better news for investors in open funds, with final payouts up and exit penalties down - although annual bonuses remained static.

Zombie-fund policyholders were promised better returns when they were taken over, but the vast majority of Pearl policyholders will get no annual bonus this year.

Pearl said it was focusing on delivering better long-term returns to investors by increasing